EX-10.4 MANAGEMENT INCENTIVE COMPENSATION PLAN





Exhibit
10.4





AGCO CORPORATION




AMENDED AND RESTATED

MANAGEMENT INCENTIVE PLAN




(EFFECTIVE JANUARY 1, 2008)




 









 






I. PURPOSE; EFFECTIVE DATE; PLAN YEAR





          1.1 Purpose. Consistent with AGCO’s compensation philosophy, the purpose of this
Management Incentive Plan (“Plan”) is to facilitate alignment of management with corporate
objectives and shareholder interests, in order to achieve outstanding performance and to meet
specific AGCO Corporation (“Corporation”) financial goals. It is the intention of the Corporation
to establish an incentive compensation plan where payments are competitive, tied to performance and
offer shareholder protection, and assist with the attraction and retention of key management staff.




          1.2 Effective Date. The Plan, as amended, will become effective as of January 1,
2008.




          1.3 Plan Year. The “Plan Year” shall be the twelve (12)-month period ending December 31 of
each year.



II. ADMINISTRATION OF THE PLAN 





          Subject to the provisions of the Plan, unless determined otherwise by the Corporation’s Board
of Directors, the Compensation Committee of the Board of Directors (“Committee”) shall have the
sole authority and discretion:




	 	•	 	To construe and interpret the Plan;
	 
	 	•	 	To establish, amend, change, add to, alter and/or and rescind rules, regulations and
guidelines for administration of the Plan;
	 
	 	•	 	To make all designations and determinations specified in the Plan;
	 
	 	•	 	Except as noted herein, to determine the amount of awards and payments to be made under
the Plan and the status and rights of any Participant to payments under the Plan; and
	 
	 	•	 	To decide all questions concerning the Plan and to make all other determinations and to
take all other steps necessary or advisable for the administration of the Plan.





III. PLAN FUNDING





          The Plan will be funded annually as a part of the Corporation’s annual budgeting process.



1









 





IV. ELIGIBILITY





          Participation is limited to key full-time personnel of the Corporation and its subsidiaries
who have the ability to materially impact the financial success of the Corporation and have an
acceptable performance review or rating. Management will select the participants each year with
the approval of the Senior Vice President, Human Resources. Notwithstanding the foregoing, the
Committee must approve all awards to elected officers of the Corporation. As a guideline, eligible
jobs should fall in grades fourteen (14) and above. The Plan replaces any other type of bonus or
non-qualified profit sharing program that a participant may have participated in previously.



V. AWARD OPPORTUNITY





          Target incentive awards will be a percentage of a participant’s salary for the Plan Year. The
Committee may change the target award levels from time-to-time as it deems advisable. Initial
target award levels are:




	 	•	 	CEO: 130%
	 
	 	•	 	CFO: 100%
	 
	 	•	 	GMs: 70%
	 
	 	•	 	Other SVPs: 50%
	 
	 	•	 	Other Participants: Not more than 40%





VI. PERFORMANCE CRITERIA AND GOALS





          6.1 Performance Criteria. Awards under the Plan may be based upon corporate,
regional/functional or personal goals. The Corporate portion must be a minimum of 50% of the total
target award. Generally, three (3) to seven (7) performance measures will be used to measure performance,
and will differ depending on participant’s position with the Corporation. The initial performance
measures are:



	 	 	 	 	 
	 	 	SVP/Regional General	 	 
	CEO and CFO	 	Managers	 	Other Participants
	•   Corporate:

	 	• Corporate:	 	• Corporate:
	- EPS

	 	- EPS
	 	- EPS
		 	 	 	
	- Free Cash Flow

	 	- Free Cash Flow	 	- Free Cash Flow
		 	 	 	
	- Customer Satisfaction

	 	- Customer Satisfaction	 	- Customer Satisfaction
		 	 	 	
	 

	 	• Functional/ Regional:	 	• Functional/ Regional:
	 

	 	- Varies
	 	- Varies
	 

	 	 	 	






2









 







    6.2 Performance Measures.




              Performance measures for executive officers (“Section 162(m) Officers”), who are, or
reasonably could be expected during the Plan Year to be, among those subject to the deductibility
limitations of Section 162(m) of the Internal Revenue Code (“Section 162(m)”) shall consist of one (1)
or more of the following, which may be applied on a company-wide, geographic or operating unit
basis:




	 	•	 	Earnings per share and/or growth in earnings per share in relation to target objectives;
	 
	 	•	 	Operating or free cash flow and/or growth in operating or free cash flow in relation to
target objectives;
	 
	 	•	 	Return on invested capital in relation to target objectives;
	 
	 	•	 	Revenue and/or growth in revenue in relation to target objectives;
	 
	 	•	 	Total stockholder return (measured as the total of the appreciation of and dividends
declared on the Common Stock) in relation to target objectives;
	 
	 	•	 	Net income and/or growth in net income in relation to target objectives;
	 
	 	•	 	Return on stockholders’ equity in relation to target objectives;
	 
	 	•	 	Return on assets in relation to target objectives;
	 
	 	•	 	Return on common book equity in relation to target objectives; and
	 
	 	•	 	Customer satisfaction and/or improvement in customer satisfaction.






Specific definitions initially shall be:




	 	•	 	EPS: Diluted and adjusted to exclude restructuring and certain other infrequent items.
	 
	 	•	 	Free Cash Flow: Cash flow from operations less capital expenditures. Excludes cash flow
from financing such as increases in accounts receivables securitizations.
	 
	 	•	 	Customer Satisfaction: Overall customer satisfaction index that measures after-sales
service, sales experience and product quality.
	 
	 	•	 	Functional/Regional: Must be approved by the appropriate Senior Vice President, CEO or
CFO.





                   6.3 Weighting of Measures. The weighting will differ depending on a participant’s
position with the Corporation. The initial weighting will be:



3









 





	 	 	 	 	 	 	 
	 	 	Senior Vice	 	Regional General	 	 
	CEO and CFO	 	Presidents	 	Managers	 	Other Participants
	• Corporate

	 	• Corporate
	 	• Corporate
	 	• Corporate
	Performance is

	 	Performance is 70%
	 	Performance is 50% of
	 	Performance is not less
	weighted 100%

	 	of total weight

	 	total weight

	 	than 50% of total
	- EPS: 50%

	 	- EPS: 43%
	 	- EPS: 40%
	 	weight
	 

	 	
	 		 	• Weighting of
	- Free Cash Flow:

	 	- Free Cash Flow:
	 	- Free Cash Flow: 40%
	 	Functional/ Regional
	40%

	 	 43%
	 		 	Performance — Varies
	 

	 		 	 	 	(Equal to balance of
	- Customer

	 	- Customer
	 	- Customer
	 	weight not applied to
	Satisfaction: 10%

	 	Satisfaction: 14%	 	Satisfaction: 20%
	 	Corporate measures)
	 

	 	
	 	 	 	 
	 

	 	• Functional
	 	• Regional	 	 
	 

	 	Performance is 30%
	 	Performance is 50% of	 	 
	 

	 	of total weight
	 	total weight	 	 
	 

	 	- Varies	 	- Varies	 	 
	 

	 	
	 	 	 	 







          6.4 Performance Goals. The Committee shall approve annual written objective
performance goals reflecting corporate performance not later than ninety (90) days after the
commencement of the Plan Year to which the goals relate (or such earlier or later date as is
permitted or required by Section 162(m)). Such performance goals must be uncertain of achievement
at the time that they are established and determinable by a third party with knowledge of the
relevant facts. The Committee may not exercise any discretion to increase the amount of
compensation that otherwise would be due upon attainment of any performance goal.



VII. PLAN TRIGGER; PAYMENT OF AWARDS; ADJUSTMENTS; DISCRETIONARY AWARDS





          7.1 Plan Trigger. Incentive awards will not be paid for any category of performance
measurement unless the Corporation achieves the minimally acceptable specified plan trigger, which
may be specified as a percentage of budget. Notwithstanding the foregoing, the Committee may waive
one or more triggers to the extent applicable to participants other than Section 162(m) Officers.




          7.2 Payment of Awards. If a plan trigger is achieved, achievement of performance
measures, based on year-end results and other measurements, are determined for each incentive
category or measure with a total earned performance award being the sum of these measures (i.e.,
corporate and functional/regional). Payments shall be made not later than March 15th of the year
following the Plan Year. The achievement of the Plan triggers and payouts to Section 162(m)
Officers must be approved in advance in writing by the Committee. The target incentive award is
determined by a percentage of the actual gross base salary earned by the employee



4









 







during the
relevant Plan year (exclusive of bonus or other W-2 adjustments for moving expense, perquisites or
other fringe benefits). The range of awards will vary based on performance from 0% to 150% of
target bonus levels. The initial range shall be:



	 	 	 	 	 
	Performance Level as a % of Goal	 	Payout Level as a % of Target Bonus
	Minimum: 80%
	 	 	40	%
	 
	 	 	 	 
	Target: 100%
	 	 	100	%
	 
	 	 	 	 
	Maximum: 120%
	 	 	150	%







Notwithstanding
the foregoing, in no event may a participant receive more than $3,000,000 in a Plan
year.




Other payment considerations include:




	 	•	 	If a participant is transferred into another position that is also eligible for the
Plan, the participant’s award will be pro-rated based on the number of months during a Plan
Year in each position.
	 
	 	•	 	If a participant is promoted to a higher level position during a Plan Year, the
participant’s award will be based on the number of months worked in each position and the
base pay and target award for each position.
	 
	 	•	 	If a participant is hired during a Plan Year, the participant’s award will be based on
the number of months the participant was employed during the year.
	 
	 	•	 	If a participant terminates employment prior to the end of a Plan Year due to death,
approved retirement or disability, the participant (or the participant’s designated
beneficiary) will receive a pro-rata share, based on gross base salary to the date of
termination and actual performance, when awards are paid to all other participants.
	 
	 	•	 	If a participant quits before the completion of the last day of the Plan Year, for
reasons other than death, approved retirement or disability, then the participant will
forfeit any award.
	 
	 	•	 	If a participant is terminated without cause before the completion of the last day of
the Plan Year, for reasons other than death, approved retirement or disability, then the
participant will receive a pro-rata share based on gross base salary to the date of
termination and actual performance, when awards are paid to other participants.
	 
	 	•	 	If a participant is terminated without cause or quits after the end of the Plan Year for
reasons other than death, approved retirement or disability, but before the award is paid,
the participant will receive a complete award when paid to all other recipients.




5









 






	 	•	 	If a participant terminates employment after the end of the performance period for
reasons of death, retirement or disability, but before the award is paid, the participant
will receive a complete award when paid to all other recipients.
	 
	 	•	 	If a participant is terminated for cause at any time before the award is paid, the
participant will forfeit any award.






          7.3 Adjustments. The Committee has the authority to make adjustments to the Plan’s
performance measures in the event of certain circumstances or uncontrollable events, which include,
but are not limited to:




	 	•	 	Significant one-time unexpected restructuring expenses
	 
	 	•	 	Significant unplanned costs associated with a merger or acquisition
	 
	 	•	 	Significant unplanned net income adjustments for debt refinancing
	 
	 	•	 	Significant unplanned or unexpected taxes and/or legal charges associated with changes
in legislation
	 
	 	•	 	Changes in generally accepted accounting principles (GAAP) or the impact of any
extraordinary items as determined under GAAP






          7.4 Discretionary Awards. As appropriate, the Committee may make special awards for
participants (at the time of grant in lieu of performance-based awards or at any time in addition
to any other awards). Notwithstanding the foregoing, discretionary awards are separate and
distinct awards and shall not be contingent upon the failure to pay any other performance-based
award.




          7.5 Change in Control. In the event of a change in control, the following payments
shall be made. Promptly following the date of a change in control (but in all events within thirty
(30) days thereafter), each participant will be paid a pro rata portion of his or her bonus, based
on actual performance as of such date extrapolated for a full Plan Year. Such extrapolation shall
be based upon results through the month most recently complete prior to the change in control.
The pro rata portion shall be determined using a fraction where the numerator is the number of days
from the beginning of the Plan Year until and including the date of the change in control and the
denominator is 365.




          If within two years following a change in control a participant who is identified in writing
by the Committee as being expressly subject to this paragraph is terminated without cause, the participant
will receive (i) a pro-rata share of his or her bonus, based on gross base salary to the date of
termination and actual performance as of the date of termination extrapolated for a full Plan Year
and (ii) an amount equal to the average of the awards actually earned by the participant during the
prior two completed Plan Years and the current year’s bonus extrapolated actual performance. Any
such extrapolation shall be based upon results through the month most recently complete prior to
the termination. Such payments shall be made promptly after the
termination (but in all events within thirty (30) days thereafter). The pro rata calculation
shall be made in the same manner as described in the immediately preceding paragraph, except that
the numerator shall be determined until and including the date of termination.



          To
the extent that a payment is due to a participant under any other
section of this Plan with respect to a year that includes the portion
of the year covered by this section, the Company shall be entitled to
receive a credit against such subsequent payment for payments made
pursuant to this section.



6









 






         For
the purposes of this plan, the term “change in control” shall mean change in the ownership
of the Company, change in the effective control of the Company or change in ownership of a
substantial portion of the Company’s assets, as described in Section 280G of the Code, including
each of the following: (i) a change in the ownership of the Company occurs on the date that any one
person, or more than one person acting as a group, acquires ownership of stock of the Company that,
together with stock held by such person or group, possess more than fifty percent (50%) of the
total fair market value or total voting power of the stock of the Company (unless any one person,
or more than one person acting as a group, who is considered to own more than fifty percent (50%)
of the total fair market value or total voting power of the stock of the Company, acquires
additional stock); (ii) change in the effective control of the Company is presumed (which
presumption may be rebutted by the Committee) to occur on the date that
either: any one person, or more than one person acting as a group, acquires (or has acquired during
the twelve (12)-month period ending on the date of the most recent acquisition by such person or
persons) ownership of stock of the Company possessing thirty percent (30%) or more of the total
voting power of the stock of such Company; (iii) a majority of members of the Company’s Board is
replaced during any twelve (12)-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Company’s Board prior to the date of the appointment
or election of such new directors; or (iv) a change in the ownership of a substantial portion of
the Company’s assets occurs on the date that any one person, or more than one person acting as a
group, acquires (or has acquired during the twelve (12)-month period ending on the date of the most
recent acquisition by such person or persons) assets from the Company that have a total fair market
value equal to forty percent (40%) or more of the total fair market value of all of the assets of
the Company immediately prior to such acquisition or acquisitions unless the assets are transferred
to: a stockholder of the Company (immediately before the asset transfer) in exchange for or with
respect to its stock; an entity, fifty percent (50%) or more of the total value or voting power of
which is owned, directly or indirectly by the Company; a person, or more than one person acting as
a group, that owns, directly or indirectly, fifty percent (50%) or more of the total value or
voting power of all of the outstanding stock of the Company; or an entity, at least fifty percent
(50%) of the total value or voting power is owned, directly or indirectly, by a person, or more
than one person acting as a group, that owns directly or indirectly, fifty percent (50%) or more of
the total value of voting power of all of the outstanding stock of the Company.



VIII. MISCELLANEOUS PROVISIONS





          8.1 Successors. All obligations of the Corporation under the Plan with respect to
awards granted hereunder shall be binding on any successor to the Corporation, whether the
existence of such successor is the result of a direct or indirect purchase of all or substantially
all of the business and/or assets of the Corporation, or a merger, consolidation, or otherwise.




          8.2 No Lien. This Plan does not give a Participant any interest, lien, or claim
against any specific asset of the Corporation. Participants and beneficiaries shall have only the
rights of a general unsecured creditor of the Corporation.




          8.3 Termination and Amendment. The Plan may be terminated or amended by the Committee
at any time, provided, however, that a termination or amendment shall not materially



7









 







negatively
impact awards that are outstanding as of the time of termination or amendment except as required by
law.




          8.4 Status of Awards under Section 162(m). If any provision of the Plan does not
comply or is inconsistent with the requirements of Section 162(m), such provision or agreement
shall be construed or deemed amended to the extent necessary to conform to such requirements.
Notwithstanding the above, the Committee in its sole discretion may, with respect to any award to
be granted under the Plan, determine that compliance with Section 162(m) is not desired after
consideration of the goals of the Corporation’s executive compensation philosophy and whether it is
in the best interests of the Corporation to have such awards not qualify.




          8.5 No Employment Rights. No participant has any right to be retained in the employ
of the Corporation or any subsidiary by virtue of participation in the Plan.




          8.6 Governing Law. The Plan and awards hereunder shall be governed by and construed
according to the laws of the State of Georgia.




8